10 Questions to Ask a Potential Contract Manufacturing Partner

Thriving in today’s dynamic environment often requires selecting a partner to come alongside your product manufacturing efforts. Choosing a Contract Manufacture can be nerve-wracking and risky. With so many options, both domestic and abroad, the decision often comes down to price. And while price is important, there are many other factors to consider when selecting the ideal Contract Manufacturing partner to help take your product to market on time, on budget, and at a competitive value. When conducting due diligence in the search for your next specialty product manufacturing partner, there are many questions with which you’ll want solid answers. Start with these ten.

1. Do you have a solid quality program in place?

Insist that your Contract Manufacturing partner has adopted quality standards. Moreover, check to see how long they have been certified. Quality guidelines such as ISO 9001:2008 provide assurance that your product is being developed consistently and at the standards you require.

2. Can you provide creative solutions to help us manage change?

A seasoned Contract Manufacturer can provide you with a detailed project timeline and offer suggestions for shortening lead times to help you get your product to market on time. For example, material and component procurement can often be done during prototype testing, or blanket purchase orders can be placed to eliminate component and raw material lead times on subsequent orders. An experienced Contract Manufacturer can also outline the risks when tracking a project to help eliminate surprises.

3. What will your top 3 customers tell me about you?

A confident business partner is always willing (and proud) to have prospective customers reach out to its top accounts for a reference. Sometimes strict confidentiality agreements preclude such conversations, but when an organization truly enjoys working with its Contract Manufacturing partner, they often find a way to provide a reference in a discrete, non-public way.

4. How big is your company?

Compared to what? The general convention of selecting a potential outsourced business partner was developed decades ago by the financial markets in order to help describe differences in valuation multiples across various industries. By now we’ve learned how ridiculous the concept really is. Generally, if you find the right experience fit for the product you are building, and a fit across other areas like geography, technology, culture, relationship, management style, and total business model, size doesn’t matter.

5. I just need to find the lowest price. Can you do that?

If price is your only concern, then you only need to ask one question, not ten, or even two. There are literally hundreds of Contract Manufacturers that will gladly take your business in exchange for some cash (“take” being the key word here). This is not a relationship, it’s merely a business deal until the next cheaper manufacturer comes along. No problem, of course, if this is your business model. But for most organizations, dimensions such as Total Cost of Ownership, Customer Lifetime Value, and Risk are paramount to price. Choose wisely.

6. What is your communication system to address priority issues?

Contract Manufacturers aside, any superior organization has an internal, regimented communication protocol established to ensure a consistent and natural flow of information between the team members. With top level Contract Manufacturers this is a trait inherit to their culture, and has been from their inception. Sales, Quotation, Research and Design, Technical, Quality Control, Operations and Customer Service all work together to make sure projects stay on track and on budget. They obsess over ensuring that project updates (both good and bad) are constantly being fed back to the customer.

7. Can you help my product stay compliant?

Some Contract Manufacturers only worry about their own regulatory compliance, but the finest will proactively work with you to manage regulatory filings and updates, provide labeling guidance and help navigate the often perplexing environment of industry regulation. They can also be a resource to helping you manage the long-term stability of your product in an ever-changing world.

8. How can I know that you’re not building for my competitor?

First and foremost, if your critical project, and the proprietary nature of the manufacturing processes, is in the hands of the lowest bidder (see #5), then this is an urgent issue to address. In most cases, however, you should find the most broadly capable and compatible Contract Manufacturer for your specific business and often times this means building with the same company as one of your competitors.

9. Are you financially viable?

You want your relationship with a Contract Manufacturer to last for many years. That’s why it’s incumbent upon you to make sure your partner is financially stable. Don’t be bashful about asking tough questions. Do they invest in employee training? Will they provide banking references? Do they invest profits back into the business in areas like new equipment? Are they diversified in industries besides yours?

10. Do you have Lean initiatives in place?

When it comes to reliable contract manufacturing, you need a strong, committed business partner. Seek out those that not only demonstrate a proven, committed dedication to meeting your requirements, but are continually working towards continuous improvement. If your Contract Manufacturer is holding regular training and continuous improvement events for both the knowledge workers on the production floor and for front office personnel, you can be confident that they are passionate about process improvement.

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A final note: stuff happens. Anyone who tells you that production always goes smoothly and effortlessly is either insincere or is a Contract Manufacturing rookie. An experienced, confident partner will openly share some of their toughest challenges, as well as how they dealt with corrective actions to ensure that they did not happen again. They’ll also demonstrate how they communicate such news with their customers

Selecting the ideal Contract Manufacturer to partner with and take your valuable product to market is a weighty decision, but shouldn’t be a daunting endeavor. Choosing the wrong one may cost you money, customer trust, your job, or worse – your company. Carefully consider all of the critical factors for your business model, and then decide which partner is right for you. Don’t allow one area of due diligence to fully overshadow all of your business level requirements. When you find a partner that will not only help take your company to the next level, but will work with you to strengthen a meaningful, valuable relationship, your chances for long-term success are greatly improved.